China-Laos-Thailand Railway Reshapes Vietnam’s Cassava and Tapioca Starch Industry
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The completion of the China-Laos Railway has dramatically altered trade flows in Southeast Asia, particularly affecting Vietnam’s cassava and tapioca starch industry. As part of the China-Laos-Thailand corridor, this railway has significantly reduced transportation costs and shipping times, enhancing China’s supply chain connectivity with ASEAN.
Since its launch in December 2021, the China-Laos Railway has facilitated rapid trade expansion, with cross-border freight volume surpassing 50 million tons by 2025. Laos has taken full advantage of this infrastructure, boosting its direct tapioca starch exports to China from $14.8 million in 2020 to $193 million in 2024. Previously, Laos exported cassava products to Vietnam for re-export to China, but this trade route has nearly disappeared, as Lao tapioca starch shipments to Vietnam dropped from $22.2 million in 2020 to almost zero by 2023.
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Chinese investment has further accelerated this shift. Major Chinese firms have developed large-scale cassava plantations and processing hubs in Laos, securing direct access to raw materials at lower costs. Key developments include Hunan Gaoqiao Market Co., Ltd.'s plan to establish the world’s largest cassava production base in Laos, supporting 400,000 farmers, and Sichuan Pan-Asia Investment Group’s expansion of cassava plantations in Vientiane, Sayaburi, and Gammon Provinces. Meanwhile, China has built tapioca starch import and distribution centers in Hunan and Sichuan, ensuring a steady supply from Laos. By 2024, China had begun constructing 30 new tapioca starch factories in Laos, while only three Chinese factories continued purchasing from Thailand.
For Vietnam, this shift presents a major challenge. China remains Vietnam’s largest tapioca starch export market, accounting for over 95% of total exports. However, as China increasingly sources cassava from Laos, Vietnamese exporters face declining demand and growing competition.